NZ house sales drop 20% in April as central bank moves bite

NZ house sales drop 20% in April as central bank moves
bite

By Suze Metherell

May 12 (BusinessDesk) –
New Zealand house sales fell 20 percent in April from a year
earlier, extending a decline in sales of cheaper property as
the Reserve Bank’s restrictions on low-equity mortgages
and interest rate hikes weigh on buyers.

The number of
houses sold by real estate agents fell to 5,670 in April,
from 7,104 in the same month last year, according to the
Real Estate Institute of New Zealand. The number of
properties sold below $400,000 slid 32 percent to 2,497,
accounting for 44 percent of all turnover compared to 51.4
percent a year earlier.

Sales of houses between $400,000
and $600,000 fell 14.3 percent to 1,557 as did sales of
houses between $600,000 and $1 million down 6.2 percent to
1,185, while $1 million plus purchases climbed 14.3 percent
to 431. The top two brackets of $600,000 plus housing
turnovers made up 28.5 percent, compared to 23.1 percent a
year earlier.

The national median sale price fell 1.8
percent from a record $440,000 in March to $432,250 in
April. The REINZ stratified housing price index, which
smooths out peaks and troughs, climbed 8.5 percent to a
record 3971.2 points in April, compared to a year earlier.

“The number of sales in the sub-$400,000 category
continue to fall faster than the market over all, suggesting
that the loan-value-ratio restrictions are continuing to
have an impact on buyer intentions at the lower price
points,” chief executive Helen O’Sullivan said.
“Commentary from real estate agents around the country
indicates that first home buyers are an even scarcer
commodity than they were in October and November last
year.”

Last October the Reserve Bank imposed
restrictions on the level of mortgage lending banks could
make on a deposit of less than 20 percent. The expectation
is the restrictions will remain in place until late this
year, and were introduced as part of Governor Graeme
Wheeler’s attempt to slow the housing market without
hiking interest rates for fear of fuelling demand for an
already elevated currency.

Since then, Wheeler has lifted
the official cash rate a quarter-point to 2.75 percent but
last week signalled rate rises may not be as regular as
previously assumed if the exchange rate remains strong. The
high kiwi dollar weakens tradables inflation and would be a
factor in the bank’s view of the “extent and speed” of
hikes in interest rates, Wheeler said at the
time.

Today’s REINZ figures showed all of the 12 regions
surveyed declined in April, compared to March, with
Southland reporting the largest monthly fall in sales
dropping 28.7 percent.

The number of houses sold in
Auckland fell 20 percent to 410 to the year earlier, while
the median sale price climbed 10.1 percent to $611,000.
Canterbury/Westland sales fell 15.8 percent to 786 and
median price climbed 141.9 percent in the year to $395,000.

Both regions recorded a drop in median house prices in
the month, although April is often a quieter month after a
busy March and further impacted by Easter and school
holidays, “however, these factors cannot explain the
entire drop between April this year and April last year –
the volume of sales has retreated to 2012 levels,”
REINZ’s O’Sullivan said.

The average number of days
to sell was unchanged in the year at 33 in April, and fell
by one day compared to
March.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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